The genuineness of the books of account is a question of fact to be determined by the Tribunal on the evidence adduced by the appellant.

Headnote:
INCOME TAX - High Denomination Notes Order - Encashment of notes - Whether notes represented concealed profits - Whether taxable.
Fact of the Case:

The appellant, a non-resident British subject, was assessed to income-tax for the year 1946-47. During the relevant accounting year, the appellant encashed high denomination notes worth Rs. 2,68,000. The Income-tax Officer held that the notes represented concealed profits and were taxable. The Appellate Assistant Commissioner allowed the appeal and deleted the sum of Rs. 2,68,000 from the assessment. The Commissioner of Income-tax appealed to the Appellate Tribunal, which held that a sum of Rs. 1,28,000 had to be taken as income and the balance of Rs. 1,40,000 was properly regarded as capital.
Finding of the Court:

The Tribunal found that the appellant had not proved that the notes had devolved on him on his father's death. The Tribunal also found that the appellant's uninvested cash was likely to be between Rs. 1,50,000 and Rs. 2,00,000 out of which a sum of Rs. 1,40,000 at the most could have been in high denomination notes. The Tribunal therefore held that out of the high denomination notes of the total value of Rs. 2,68,000 encashed by the appellant in January, 1946, notes worth Rs. 1,40, 000 could have been his capital assets & the balance of Rs. 1,28,000 must have been his undisclosed income.
Issues: 1. Whether the appellant had proved that the notes had devolved on him on his father's death. 2. Whether the appellant's uninvested cash was likely to be between Rs. 1,50,000 and Rs. 2,00,000 out of which a sum of Rs. 1,40,000 at the most could have been in high denomination notes.
Ratio Decidendi: 1. The Tribunal's finding that the appellant had not proved that the notes had devolved on him on his father's death was based on the evidence adduced by the appellant. The Tribunal found that the books of account kept by the father at Ratangarh and continued by the appellant after his death were not genuine. The Tribunal also found that the appellant had not produced the books of account kept by the father in his own business in Calcutta which was carried on from 1906 to 1926. 2. The Tribunal's finding that the appellant's uninvested cash was likely to be between Rs. 1,50,000 and Rs. 2,00,000 out of which a sum of Rs. 1,40,000 at the most could have been in high denomination notes was based on the evidence adduced by the appellant. The Tribunal found that the only source of income of the appellant and his father from 1926 to 1945 was interest earned on moneys deposited in bank. The Tribunal also found that about 1945 the appellant had in his bank a sum of about Rs. 8 lacs to Rs. 10 lacs.
Final Decision: The appeal was dismissed with costs.

Judgement

SARKAR, J. : This is an appeal from a judgment of the Income-tax Appellate Tribunal dated August 7,1953, filed with leave granted under Art, 136 of the Constitution. The Tribunal held that of the high denomination notes of the value of Rs. 2,68,000 encashed by the appellant in the relevant accounting year, notes worth Rs. 1,28,000 represented his concealed profits and were liable to be taxed. In this appeal the appellant challenges the correctness of this finding.

2. The appellant was assessed to income-tax for the year 1946-47 as a non-resident British subject, and out of the proceedings of this assessment the present appeal arises. The relevant accounting year was the period from November 6, 1945 to April 9, 1946. The appellant was a resident of Ratangarh in the Princely State of Bikanere outside what was British India. On November 6, 1945 he started a business in Calcutta, the accounts of the first year of which were closed on April 9, 1946. On January 19, 1946 the appellant came to Calcutta with 11 ten thousand rupees and 158 one thousand rupees currency notes which he encashed a few days later through the Punjab National Bank under the provisions of the High Denomination Notes Order promulgated earlier in the same month. In his books of account of the Calcutta business for the relevant accounting year, the appellant credited the value of the notes, namely, Rs. 2,68,000 as capital received from him. Upon the Income-tax officer asking him to explain how he came across these notes, the appellant said that the money had come to him from his father who had died in 1942. The Income-tax 0fficer took the view that the explanation of the appellant was not supported by his books of account and other documents produced by him. He thereupon held that the amount represented by the notes was income from undisclosed business activities and was therefore taxable.

3. The appellant then took an appeal to the Appellate Assistant Commissioner, who came to the conclusion that the books of account and other documents produced by the appellant showed that the notes formed part of the assets that devolved on the appellant upon his fathers death. He, therefore, allowed the appeal and deleted the sum of Rs. 2,68,000 from the assessment.

4. The Commissioner of Income-tax, then appealed from this decision to the Appellate Tribunal. The Tribunal for reasons to which we shall presently refer, allowed the appeal in part but held that in the circumstances disclosed a sum of Rs. 1,28,000 had to be taken as income and the balance of Rs. 1,40,000 was properly regarded as capital. The Tribunal, therefore, modified, the assessment order by including in it a sum of Rs. 1,28,000 as undisclosed income.

5. The appellant challenges the correctness of the Tribunal s decision before us. The learned counsel for the appellant admitted that he could not ask us in this appeal to reassess the evidence and to come to a conclusion of our own on it. It is not the practice of this Court to do so. The learned counsel relied on Mehta Parikh and Co. v. The Commissioner of Income-tax, Bombay, 1956 SCR 626 at p. 636 : where it was said :

"The Court would be entitled to intervene if it appears that the fact finding authority has acted without any evidence or upon a view of the facts, which could not reasonably be entertained or the facts found are such that no person acting judicially and properly instructed as to the relevant law would have come to the determination in question."

The learned counsel contended that judged by the test laid down in the case just cited, the Triburtal s finding could not be sustained.

6. The Tribunal had to decide a question which was entirely one of fact. It had to decide whether on the evidence adduced by the appellant it could be said that the notes were part of the assets received by him from his father. The appellants case was this :

7. Mohanlal, the appellants adoptive father, was a partner in the firm of Manekchand Tarachand which carried on

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Judicial Analysis